The insurance industry’s latest effort to price individuals out of the civil justice system is well underway in Tennessee.
Tennessee Senate Bill 1360, which is enthusiastically supported by one of the largest trade groups in the insurance industry, was sent to Tennessee Governor Bill Haslam’s desk in April 2014. If signed into law, the bill would artificially cap the amounts that litigation funding providers could receive for their services, making it cost-prohibitive for most to operate in the state.
“As written, the bill would essentially deny the people of Tennessee access to our services,” said Darryl Levine, CEO of USClaims.
The Tennessee bill’s insurance industry backers would like everyone to believe that the proposed legislation is an attempt to protect the common man who may be unable to get financial assistance from friends, family or conventional bank loans. The bill’s actual intent is to preserve a status quo that makes it more possible for wealthy defendants — such as insurance companies – to bury lower-income plaintiffs such as individuals and small businesses in legal bills and unpaid living expenses so that they’ll be more amenable to an unjust settlement.
Before the development of the litigation funding business in the United States, a wealthy defendant facing damages in a civil case could, for example, instruct its legal team to use whatever procedural methods were available to prolong the civil court process, increasing legal fees and financial pressure for the plaintiff until they either dropped their lawsuit or agreed to a premature out-of-court-settlement that didn’t properly compensate them for damages they incurred due to a defendant’s actions or negligence.
The problem with the Tennessee legislation is that the very concept of “interest” is meaningless when applied to litigation funding, because the pre-settlement amounts offered to the clients of litigation funding companies are not loans.
“A loan must be paid back,” said Levine. “We might help you feed your family and keep a roof over your head for a year or more, while you and your attorney pursue justice in the courts against a defendant who has wronged you. If you prevail, our company receives its payment out of either the settlement or the judgment against the defendant. But if your lawsuit isn’t successful, you don’t have to pay us a dime. That’s how litigation funding works. That’s not ‘predatory lending.’ That’s not lending at all.”
When a litigation funding company makes the decision to fund a case, they are making an investment in the case’s expected outcome. As with any investment, there is no guarantee of a profitable return.
“Our industry has re-opened the civil justice system to individuals and other small interests who might otherwise have to choose between paying their lawyer and paying their rent,” Levine said. “This law would tilt the playing field back in the direction of the insurance companies.”
The insurance industry claims the Tennessee bill would preserve more money for injured parties. When those injured parties are denied access to the money they need to support themselves, though, the only winners are the insurance companies themselves.
At USClaims, we offer pre-settlement funding, if a case is qualified for pre-settlement funding then we would purchase a portion of the proceeds of the anticipated court judgment or settlement for some cash now. USClaims only gets paid if a case is won or has reached a settlement! Apply now or call us today at 1-877-USCLAIMS to learn more.